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Institutional players have been investing in the foreclosed single-family home market in increasing numbers. One popular strategy to monetize these investments is to go public as a REIT. However, there are still doubts about this model's ultimate efficiency.

Related Summaries

Ellington Management Group has sold 900 single-family rental properties to American Homes 4 Rent for $126 million, exiting the market altogether after two years. American Homes 4 Rent now owns more than 30,000 properties and is the second-largest single-family property owner.

Starwood Property Trust is mulling over spinning off its single-family home rental business and investments in nonperforming residential loans. The company has acquired a portfolio of 1,644 foreclosed homes for $200 million, among other similar assets.

The best mispriced opportunity right now is foreclosed single-family housing, says Tom Barrack of Colony Capital. His take is that buying single-family homes and renting them out is one of the greatest investment opportunities in the last 20 years.

Blackstone Group has invested more than $250 million in foreclosed single-family homes, according to sources. It plans to rent out the residences, with the goal of acquiring enough assets to possibly take them public as a REIT. Other scenarios call for Blackstone to sell the assets to another company or to the tenants.

A growing number of well-financed investors in the U.S. aim to buy thousands of foreclosed single-family homes and renovate them to become rental properties. Waypoint Real Estate Group, one of the first companies to pursue the strategy on a large scale, plans to buy 10,000 to 15,000 more foreclosed houses by the end of next year.